Satya Nadella says AI must prove its massive energy consumption is worth it
Satya Nadella argued that the ultimate test for AI isn’t how advanced or novel it is, but whether it solves real-world problems that make life better and processes more efficient.
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As artificial intelligence systems become more powerful — and more energy-hungry — Microsoft CEO Satya Nadella is sounding a note of caution, urging the tech industry to demonstrate that this rising consumption delivers genuine social value.
“If you’re going to use energy, you better have social permission to use it,” Nadella said during a recent session at Y Combinator’s AI Startup School. “We just can’t consume energy unless we are creating social and economic value.”
Satya Nadella argued that the ultimate test for AI isn’t how advanced or novel it is, but whether it solves real-world problems that make life better and processes more efficient. He cited healthcare as an example of where AI can make a meaningful difference, especially in cutting through bureaucratic complexity.
“A simple thing like hospital discharge — if done with an AI model — can save time, money, and energy,” he explained, pointing out that high healthcare costs in places like the US aren’t solely due to medical treatments but also involve sprawling, inefficient processes.
Microsoft's Massive Energy Appetite These comments come at a time when Microsoft itself is one of the largest builders of AI infrastructure in the world. Running advanced AI models requires vast computational resources, translating into significant electricity consumption.
A 2023 analysis by Clean View Energy found that Microsoft used roughly 24 terawatt-hours of electricity that year — comparable to the annual energy consumption of some small countries.
This energy intensity has drawn scrutiny, given that the sector’s overall energy use is forecast to balloon as AI adoption spreads. Nadella’s remarks reflect an awareness that, as Microsoft drives this expansion, it also faces questions about sustainability and ethics.
Microsoft's Climate Pledges To address these concerns, Microsoft has set ambitious environmental goals. By 2030, the company has pledged to make its data centres carbon negative, water positive, and zero waste. That means removing more carbon than they emit, conserving and replenishing water resources, and sending nothing to landfills.
The strategy includes building data centres that use less power, adopting closed-loop systems for equipment reuse and recycling, and switching to innovative cooling systems that waste less water. In some locations, such as Denmark and Ireland, Microsoft is even capturing excess heat from its servers and routing it to heat nearby homes.
In addition, the company has signed deals to buy nearly 20 gigawatts of renewable energy across 21 countries, supporting wind, solar, and other green power projects to help decarbonize its operations. It also uses AI internally to track and reduce energy use within its offices and data centres, highlighting how the same technology that drives demand can also help manage it.
Nadella isn’t the only business leader in the spotlight for grappling with the energy and environmental implications of AI.
Nadella’s remarks highlight a growing industry recognition that AI’s promise must be weighed against its environmental footprint. The technology sector faces a fundamental question: Can it scale AI responsibly, ensuring the immense energy it consumes delivers sufficient value to justify its environmental cost?
